Abstract: A recent Supreme People’s Court decision has supported the view that manufacturing products in China for export overseas does not constitute use of a trademark, and so  cannot  be  considered  infringement  of  a  trademark registered  in  China.  After  years  of  uncertainty  over  the  position  of  Chinese  courts, government and customs authorities over the so-called “OEM” (Original Equipment Manufacturing) issue, the decision is strongly indicating a likely future trend.

The decision was issued in a case involving the PRETUL trademark with a Chinese registration number 3071808. The trademark holder and the plaintiff in this case was Focker Security Products International Limited (hereafter referred to as Focker). The defendant was Yahuan Lock Co. Ltd (hereafter referred to as Yahuan) and there was another party involved named Truper Herramientas S. A. De C. V. (hereafter referred to as Truper) who was the holder of the PRETUL trademark in Mexico. Entrusted by Truper, Yahuan manufactured lock products labeled PRETUL in China for exporting to Mexico. As such, in this trademark infringement case, the court considered that Yahuan made the products and exported them all outside China, which would not mislead consumers to the products being labeled PRETUL provided by the PRETUL trademark holder in China, Focker, and no infringement would be established.

The “OEM” issue has been considered as an uncertain matter for many years in China, no matter in administrative enforcement  proceedings or judicial practice. According to the statistics from the China Customs, 1,342 shipments were seized by customs authorities in the year of 2009, among which 323 were about the “OEM” trademark issue. They were all made in China and for export only. However, some of them were considered as infringing products while others not.

Before the “NIKE case” in 2002 (refer to a summary of the case at the end of the article), a majority of courts in China considered the “OEM” trademark issue did not constitute infringement. However, after the decision of the “NIKE case”, some courts changed to the other side. In 2010, the Office of Supreme People’s Court made the issue formally clear in an official document and affirmed it did not constitute infringement. Until this PRETUL case, the Supreme People’s Court made the decision following the previous document. The case was considered as a milestone in the “OEM” trademark issue and indicated a trend that manufacturing for export does not constitute trademark infringement against a registered trademark in China.

Reference:

In 2000, Jiaxing Yinxing Garments Ltd. (hereafter referred to as Yinxing) and Zhejiang Animal Products Ltd. (hereafter referred to as Animal) were entrusted by Cidesport Company of Spain (hereafter referred to as Cidesport) to manufacture clothes with the trademark of "NIKE" in China for export to Spain, where Cidesport was the trademark holder of "NIKE". Nike International Ltd. (hereafter referred to as Nike) initiated an infringement lawsuit before the Shenzhen Intermediate Court based on its registered trademark right regarding "NIKE" in China. In December of 2002, the Court decided that the OEM manufacturers’ use of the “NIKE” trademark constituted trademark infringement and the three defendants (Yinxing, Animal and Cidesport) infringed Nike's trademark right in China. At last, the three defendants were ordered to cease infringement immediately and compensate Nike's losses for around USD 50,000.